External Analysis: Industry Structure, Competitive Forces, And Strategic Groups

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Questions Bank

What Is Strategy
Strategic Leadership: Managing the Strategy Process
External Analysis: Industry Structure, Competitive Forces, and Strategic Groups
Internal Analysis: Resources, Capabilities, and Core Competencies
Competitive Advantage, Firm Performance, and Business Models
Business Strategy: Differentiation, Cost Leadership, and Blue Oceans
Business Strategy: Innovation, Entrepreneurship, and Platforms
Corporate Strategy: Vertical Integration and Diversification
Corporate Strategy: Strategic Alliances, Mergers and Acquisitions
Global Strategy: Competing Around the World
Organizational Design: Structure, Culture, and Control
Corporate Governance and Business Ethics

All Questions

Question 1

Free

Multiple Choice

Which of the following factors best contributes to the U.S.automotive industry being characterized by high entry barriers?

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New auto companies create electric cars powered by simpler motors and gearboxes.

New entrants in the automotive industry expect that incumbents will not or cannot retaliate.

Car manufacturers require large-scale production in order to be cost-competitive.

Few industrial products are as easy to build as cars powered by internal combustion engines.

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Question 2

Free

Multiple Choice

The _____ allows the scanning, monitoring, and evaluating of changes and trends in a firm's macro environment.

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VRIO framework

SWOT analysis

BCG matrix

PESTEL framework

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Question 3

Free

Multiple Choice

Which of the following external forces is a part of a firm's task environment?

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The composition of the strategic group to which the firm belongs

The interest rates prevalent in the economy in which the firm operates

The inflation level in the economy in which the firm operates

The recent innovations in process technology, including lean manufacturing

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Question 4

Free

Multiple Choice

The government of Filvia has mandated that the standard minimum wage in the country be increased to $8,000 per year.This has ensured that all firms in the country pay their employees at least $8,000 per year, which has brought about a higher standard of living for the people of Filvia.Which of the following factors in a firm's general environment does this mandate best indicate?

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Ecological factors

Sociocultural factors

Technological factors

Legal factors

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Question 5

Free

Multiple Choice

Which of the following represents an economic factor in a firm's external general environment?

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The government regulations and laws in the country in which the firm exists

The stage of the business cycle that the country is in

The values and norms prevalent in the society in which the firm operates

The bargaining power of the firm's suppliers and buyers

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Question 6

Multiple Choice

Which of the following is an implication of low interest rates?

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Cost of capital for firms will be high.

Firms will invest less in future growth.

Economic growth rate will fall.

Consumer demand will increase.

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Question 7

Multiple Choice

What is most likely to happen when there is too much money in an economy?

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There are too many goods and services.

There is a drop in interest rates.

There is high economic growth.

There is an increase in prices.

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Question 8

Multiple Choice

In a firm's external environment, _____ primarily capture population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class.

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political trends

demographic trends

ecological trends

economic trends

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Question 9

Multiple Choice

Which of the following do the sociocultural forces in a firm's external environment best represent?

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The interest rates prevalent in an economy

The laws protecting small enterprises in a nation

The family size of the firm's target market

The rate of employee attrition within the firm

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Question 10

Multiple Choice

In the 1950s, in response to extreme forms of nationalism and the resulting world wars that had devastated Europe, the first steps were taken to create a supra-national EU.In 1992, after almost 40 years of continued economic integration, peace, and prosperity, the European leaders initiated further steps toward political economic integration.Which of the following represents one of the steps the European leaders initiated?

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Creating a country called the United States of Europe

Introducing a common currency

Providing budgetary authority to all states of the EU

Separating heavy industries such as coal and steel

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Question 11

Multiple Choice

A firm's _____ relates to its ability to create value for customers (V)while containing the cost to do so (C).

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strategic position

incumbency

threat of entry

attrition rate

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Question 12

Multiple Choice

The primary objective of Porter's five forces model is to:

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replace a firm's competitive advantage with competitive parity.

understand the profit potential of different industries.

reduce the gap between the value of a firm's product and its cost of production.

break down a firm's value chain activities into primary and support.

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Question 13

Multiple Choice

In the _____ developed by Michael Porter, competition is not defined narrowly as a firm's closest competitors but rather more broadly to include other factors in an industry like buyers, suppliers, potential new entry of other firms, and the threat of substitutes.

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PESTEL framework

VRIO framework

five forces model

value chain analysis

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Question 14

Multiple Choice

Which of the following is a primary feature of the five forces model?

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It is concerned exclusively about the intensity of rivalry among direct competitors.

It takes into account a firm's internal resources, capabilities, and core competencies.

It helps managers determine the changing speed of an industry or the rate of innovation.

It views competition within an industry broadly to include forces such as buyers, suppliers, and the threat of substitutes.

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Question 15

Multiple Choice

A firm's strategic position is likely to be strong when:

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the entry barriers within the industry it operates in are low and the exit barriers are high.

its suppliers and vendors can easily forward integrate and buyers can backward integrate.

all the five forces in Porter's model are strong.

the gap between the value the firm's product generates and the cost to produce it is large.

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Question 16

Multiple Choice

Which of the following statements is NOT true about the five forces in Porter's competitive analysis model?

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The relative strengths of the five forces that shape competition are context-dependent.

The stronger the five forces in an industry, the greater the industry's profit potential.

Competition in the model is described as the tug-of-war between the five forces to capture as much as possible of the economic value created in an industry.

An analysis of the five forces provides the basis for how a firm should position itself to gain and sustain a competitive advantage.

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Question 17

Multiple Choice

Keeping in mind the five forces in the airline industry, which of the following best explains the situation in the industry?

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Substitutes are readily available in the form of trains and buses, thus reducing the profit potential in the industry.

Suppliers have weak bargaining power because they offer products that are not differentiated.

Entry barriers in the industry are high resulting in hardly any new airlines popping up.

Consumers in the industry make decisions based on price, thus reducing the intensity of rivalry in the industry.

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Question 18

Multiple Choice

The telecom industry in the country of Andalus is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms.Thus, in the telecom industry, the:

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threat of substitutes is most likely high.

threat of new entrants is most likely low.

bargaining power of buyers is most likely low.

entry barriers are most likely non-existent.

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Question 19

Multiple Choice

Which of the following is most likely an implication of new firms entering an industry?

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The bargaining power of buyers will reduce.

The industry's overall profit potential and sales will increase.

The rivalry among existing competitors will reduce.

The incumbent firms will spend more to satisfy their existing customers.

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Question 20

Multiple Choice

Economies of scale are cost advantages that accrue for firms with:

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high fixed costs.

low employee turnover.

larger output.

high capital risks.

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